UNION BANK of the Philippines, Inc. (UnionBank) targets to post a higher net income this year as it expects continued growth in its consumer lending business.

The Aboitiz-led bank is also looking to tap the bond market this year to refinance its maturing debt, depending on market conditions.

“The bank targets for net income in 2025 to be better than prior year. We are optimistic that the strong trend in our underlying drivers (e.g. new credit card acquisitions, customer growth, expansion of net interest margin and fee-based income) will continue,” UnionBank said in an e-mail last week.

It also expects its operating expenses and credit costs to stabilize this year, it added.

“Overall, our performance should improve quarter on quarter as the year progresses,” UnionBank said.

The listed bank’s attributable net income rose by 31.5% year on year to P11.93 billion in 2024.

In the first quarter, UnionBank booked a net income of P1.43 billion, down from the year prior due to one-time tax-related write-offs from a subsidiary and front-loaded non-recurring costs, it reported on Monday.

The decline in the bank’s first-quarter net profit came even as its revenues climbed by 8.4% year on year to P19.4 billion in the period amid continued growth in its consumer business.

UnionBank booked a net interest income of P15.39 billion in the first quarter, with interest earnings at P20.79 billion and interest expenses at P5.4 billion. Non-interest income was at P4.05 billion.

It said that consumer loans now account for 62% of its total loan portfolio, with credit cards, personal loans, and teachers’ loans showing the fastest growth. Its retail client base was at 17.6 million, it added.

Meanwhile, UnionBank could tap the onshore and offshore bond markets this year to refinance its maturing obligations, it added.

“While the bank’s liquidity position remains very sufficient, in order to maintain a healthy mix of term funding in its liability portfolio, the bank is considering the refinancing of its peso and dollar bond maturities this year but subject to market pricing, conditions and opportunities,” UnionBank said.

“The bank aims to optimize and diversify funding instruments and costs via a mix of deposits, bills payable and term funding, while at all times ensuring compliance with regulatory requirements and ratios.”

UnionBank’s board of directors in February approved the issuance of $800 million in papers out of its euro medium-term note (MTN) program and P30 billion in bonds from its expanded peso fundraising program. It has not set a timeline for the issuances.

The bank’s $2-billion euro MTN program was established in November 2017 and updated in 2020. The unissued balance of the program stands at $1.2 billion.

In February, the bank’s board also approved the expansion of its peso bond program to P100 billion from P50 billion previously.

UnionBank shares dropped by 15 centavos or 0.46% to close at P32.30 each on Wednesday. — Aaron Michael C. Sy